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Twitter user explains real reason of price increase of medicine in Pakistan

Economist Shahid Mehmood, in his detailed thread, talked about one of the pressing issues of Pakistan-the medicine shortage. Mehmood in his research-based thread raises questions on the continuous ignorance to address the crisis in the pharmaceutical industry of Pakistan.

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A Twitter user explains in detail the persistent increase in price and shortage of medicines in Pakistan.

Economist Shahid Mehmood, in his detailed thread, talked about one of the pressing issue of Pakistan-the medicine shortage and the price increase. Mehmood in his research-based thread raises questions on the continuous ignorance to address the crisis in the pharmaceutical industry of Pakistan.

“Why has policy continuously failed to cure these shortages? And who is behind these shortages? Is it due to government policies, the usual black market ‘mafia’, producers, or something else? Let’s dive into the issue a bit to understand,” asked Mehmood.

He said that the plague of shortage of medicines has been looming in Pakistan since 1954. The primary reason is the non-availability of the locally-produced raw materials for making medicines in Pakistan.

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“In 1976, Arthur Homer Furnia, a US Health sector specialist, noted the shortages of medicines, especially in government facilities where the trend of siphoning off medicines was common (still is) (‘The dynamics of Health: Islamic Republic of Pakistan’),” he added further in his tweet.

“The gist of the above two is that medicine shortages are nothing new for this country. In 1954, there was hardly any pharmaceutical plant for medicine production. In 1976, there were less than 100. Now, there are around 750! But shortages persist,” he said further.

“First, since 95% of the raw material for manufacturing medicines is imported, that puts the industry in a precarious position given global supply disruptions (as in Coivd-19), higher cost of imports (duties, tariffs, rupee depreciation,” said Mehmood.

Pakistan’s dependence on APIs

He informed that according to the industry experts not a single Active Pharmaceutical Ingredient from the total of 1200 is prepared in Pakistan. Hence, Pakistan is entirely dependent on the import of APIs to produce medicine in the country.

Expensive raw materials had made the medicines expensive in Pakistan. He identified two problems- the reluctance of the government to increase the prices of the medicine because it will turn out to be a politically unpopular decision.

While explaining another problem to him he said: “Now the second critical part- Govt’s pricing policy! Overall, up till 2015, policy on medicine pricing can be described as follows- we will fix prices so that they will remain low (or unchanged), so that majority of people can afford it.”

Hence, according to him, fixing prices of medicines leads to shortages of essential items. He recalled the refusal to increase the prices of the medicine back in 2001 and 2004 forced many multinational companies to leave Pakistan, creating a shortage of medicines in the market.

 

The government allowed the increase in prices in 2015 and 2018 with the introduction of two new policies. This allowed pharmaceutical companies to increase the prices of the medicine upon the agreed formula. The decision was reversed in 2020 following media backlash.

He added that this did not happen for the first time but “Govt. backed off from its commitment! In 2015, as price increases were approved after almost a decade, Govt. revoked its own decision after media raised a harangue, leading to lengthy litigation, resulting in 2018 policy after SC intervention.”

This lack of control and intervention of the government in the industry gives rise to “unethical practices in the industry to cover rising expenses (amongst few, not all!). E.g: a registered brand’s production is stopped, the new brand is registered (same formulation but at a higher price),” he added.

Read more: Sino-Pakistan Cooperation Center on Traditional Chinese Medicine established in Pakistan & China

“Raw material is sold on black market rates or smuggled. A few days ago, e.g, ANF caught 1,086 Ltrs of Ketamine (API used in psychotropic drugs) worth Rs. 34 billion. Similarly, a large retailer buys up all stocks of a drug that it knows will become short,” said Mehmood.

He quoted an instance of the Panadol where the depreciation of the rupee and the increased cost of production caused the industry to push the government to raise the price of the medicine. The government refused to increase the prices resultantly industries stopped production. The shortages triggered hoarding of the medicine causing a further shortage of the medicine. Hence, government needs to take some concrete steps to regulate the price mechanism of medicine in Pakistan.

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